Australia encouraged to focus on trade with China, India: report

Australia needs to focus on trade opportunities with China and India rather than being derailed by nerves about the rise of protectionism in the United States and Britain, according to a report released today.

The Committee for Economic Development of Australia (CEDA) cites the protectionist policies of US President Donald Trump and the UK vote to leave the European Union, as two key factors clouding potential deals with key emerging markets.

But in its Outward Investment report, CEDA's policy committee chairman, Professor Rodney Maddock said Australia was over-emphasising traditional trade with the US, UK and New Zealand at the expense of deals China and India.

"The amount that flows to China and India only accounts for 2.9 per cent of Australia's total outbound investment," Professor Maddock said.

"With concern about trade barriers stemming from Brexit and the Trump presidency, Australia should focus on engagement with its immediate region where growth opportunities are substantial."

CEDA estimates that Australian investment in traditional partners like the US and UK is valued at more than $540 billion a year.

But the report said there was a major opportunity for Australia to be a premium food provider to Asia and recommended setting up "food processing clusters" to speed integration into Asia markets.